Ten years ago, General Motors Corp. set out to reinvent the car-buying process as one way to compete with Japanese imports in the small-car market. The company had been losing market share in the passenger-car category, dropping from a nearly 43 percent share in 1985 to 35 percent in 1989. But rather than rethink its cars in existing divisions like Chevrolet or Pontiac, for instance, GM created Saturn Corp. - an entirely new company built around a no-hassle, no-haggle approach to selling cars and a "we are family" philosophy that included annual homecomings held at the manufacturing plant in Spring Hill, Tennessee. And the approach worked. Younger consumers flocked to buy the small cars with the customer-first philosophy. Without it, according to customer surveys, three-quarters of the new Saturn owners say they would have gone with an import or another non-GM car.
One problem, though. Many of Saturn's initial customers outgrew their autos. And rather than moving on to other GM vehicles, as the company had hoped, they headed for larger Japanese imports, such as Toyota Camry and Honda Accord. Although 40 percent of first-time Saturn owners were willing to squeeze their growing families into another Saturn, 23 percent opted for a mid-size car - the largest segment in the passenger car market. "We knew that we couldn't always accommodate people's needs as their circumstances changed," says Saturn marketing director Lisa Hutchinson. And GM's market share wasn't getting any better: in 1998, GM claimed just 30 percent of the passenger-car segment. The mission was clear: Saturn owners' own families were growing, but all the homecomings in the world weren't going to keep them in the GM family.
Saturn knew that its owners wanted bigger vehicles, both from the statistics staring researchers in the face and from customer feedback. But what exactly were consumers looking for? Initial market research was begun in 1995 and included both current Saturn customers as well as import owners in the mid-size market. Several research firms aided in gathering both quantitative and qualitative data, and Saturn customers and prospects were queried on every stage of the design process.
The process took about two years, says Hutchinson, and involved at least four separate research sessions. "People have a hard time imagining what they want in the future," she says, so at first, consumers were presented with eight to ten sketches of different cars to evaluate. As the design began to evolve - from miniature clay models to full-size fiberglass versions - so did the feedback. "The questions got more specific...once they had a model to look at, to touch, to feel," Hutchinson says.
Shoppers in the mid-size car segment ranked price and cost of ownership as the number one factor in choosing a mid-size vehicle, followed by dependability/reliability, and exterior styling. "One of the things Saturn owners told us was that one of the features to maintain was our polymer panels," says Hutchinson. They also wanted a car of the same quality as the smaller S-series, and with the same fun-to-drive characteristics, just with more interior space and trunk room. Safety was also high on their list.
Armed with such customer input, Saturn completed the designs for its L-series and prepared to go after the mid-size market. For the long-term health of the company, Saturn executives knew they had to make sure new people were being drawn to the brand, not just former or current Saturn owners. "We've got to make sure we're appealing to people who would not otherwise have considered a Saturn because it couldn't meet their needs," Hutchinson says. The company's primary target was the typical mid-size buyer, 70 percent of whom are married, 54 percent of whom are male, and 55 percent of whom are college graduates with a median household income of $67,000. In contrast, S-series owners tend to be college-educated, single females with a median household income of $55,000.
Saturn tapped Publicis & Hal Riney to create a two-phase campaign. The first wave, which broke in June 1999, featured teaser television ads that never displayed the new cars. Instead, they focused on non-automotive themes: a woman taking a large dog out for a walk; a group of children swimming with their father; a line of various-size blue jeans hanging out to dry. Each image was superimposed with the letters S-M-LS-XL and concluded with the tag line, "The next big thing from Saturn." The TV ads were supplemented with magazine and outdoor spots featuring similarly incongruous images, such as a shot of a woman carrying a large number of packages or a photo of a pair of baby feet nestled between those of an adult.
The L-series wasn't unveiled until early August in 60- and 90-second versions of "The Road," a television commercial that recounted the emotional journey of Saturn team members as they undertook the challenge of building the new line. The spot was followed by three additional national TV commercials touting the roominess of the new LW wagon, the performance of the series' V6 engine, and featuring a video test drive. The campaign was supported by gatefold magazine ads that replaced the teaser element of the first wave of ads with a picture of the new car, and demonstrated how the larger L-series fit into the lives of customers going through new life stages, such as expecting a baby or receiving a promotion. The LS sedan also appeared - literally - hanging on billboards in New York's Times Square, on Los Angeles' Sunset Boulevard, and near San Francisco's Bay Bridge.
TV ads aired on network, cable and syndicated programming, including during prime time, late night, on Hispanic programs, and during sports programs. Magazine ads were placed in newsweeklies, business publications, and lifestyle magazines with high readership among import-car buyers. Regional television, radio, newspaper and outdoor ads accentuated the features and cost of the new series. And the company redesigned its Web site to make it more interactive, so visitors could virtually kick the tires and sit in the driver's seat of the new Saturns displayed online.
Total spending on advertising for the Saturn division from January through July 1999 was approximately $109 million, according to Competitive Media Reporting, compared to $123 million in the same period a year earlier, and $210 million total for 1998. Since the bulk of the L-series campaign broke in August, ad spending for the series was not available at press time.
Since Saturn began selling the L-series last summer, 16,000 new cars had been sold by mid-November. "That's pretty consistent with where we should be at this point," says Hutchinson. New L-series customers have been pleased, she adds. "The feedback that we've gotten from owners so far is that this is a car that's tremendously fun to drive. It performs well, and its European characteristics make it feel different than some of the Japanese imports or domestic, mid-size cars."
The first wave of L-series customers is dead-on target: Three-quarters are married, and they have higher rates of college degrees and make more money than their S-series counterparts. Forty-nine percent are male, compared to 47 percent for the S-series, and the average age is 52, about 10 years older than S-series buyers. Perhaps most significant of all is the fact that fully 75 percent say they would have bought a non-GM car had the L-series not been on the market - higher than the company's 65 percent goal.
What the Critics Say
Although Saturn has been a leader in customer service and satisfaction (the company has consistently ranked at the top of the J.D. Power & Associates Sales Satisfaction Index Study), the S-series simply didn't have the comfort, room, or styling that people wanted, notes Lauren Fix, an automotive expert and consultant. "The L-series will be much more successful. The key to Saturn's success is that they treat the customer well, which creates loyalty," she says. People who may not have bought the smaller Saturn may consider the L-series, she adds. "I think Saturn will draw a wider selection of people than it did before - some youth and previous owners, as well as domestic and import car buyers. Saturn was losing a lot of business - the industry was wondering about its future."
How well will the L-series compete against the likes of Toyota and Honda? "I think the L-series will be successful," says Larry Bruozis, managing director of Dickens & Webster, a customer-retention consulting firm. "A lot of Camry owners are becoming disenchanted with Toyota." On the other hand, "Saturn owners are pretty loyal, almost cultish," he says. "Thousands of people show up for that big birthday party in Tennessee. How many would do that for a Chevrolet or a Camry?"
So what's the next next big thing from Saturn? After mid-size cars, the segment that attracts former Saturn owners is the sport utility vehicle, says Hutchinson, adding, "We're building a sport utility in the next couple years." Looks like that birthday party in Tennessee is going to get a lot more crowded.